Newspaper article St Louis Post-Dispatch (MO)

CSX Links Up with Conrail $8.4 Billion Buyout Would Leave Country with 4 Big Railroads

Newspaper article St Louis Post-Dispatch (MO)

CSX Links Up with Conrail $8.4 Billion Buyout Would Leave Country with 4 Big Railroads

Article excerpt

The consolidation trend in the railroad industry picked up steam Tuesday when CSX announced it would buy Conrail Inc. for $8.4 billion.

The pairing would be the fourth mega-merger in three years, and would leave the United States with just four big railroads.

CSX would become the dominant railroad east of the Mississippi River, dwarfing even Norfolk Southern Corp., its longtime rival. The deal is sure to raise antitrust complaints from customers and competitors, and could be rejected or altered by federal regulators. The pressure the merger would put on Norfolk Southern might even force it into a merger with a western line, creating the nation's first modern-day coast-to-coast railroad. Industry analysts have been mentioning Burlington Northern Santa Fe as a possible buyer. The combined CSX and Conrail would have annual sales of $14 billion, or 40 percent more than the newly merged Union Pacific Corp. and Southern Pacific Corp. CSX and Conrail both have main lines into the St. Louis area, a key transfer point for freight headed to the western half of the country. Conrail has a major rail yard on the edge of East St. Louis, where it processes traditional railcars as well as "intermodal" units - truck trailers and containers carried on special flatbed cars. The operation employs about 100 people. Representatives for the two railroads said no decisions had been made about operations in this region. "It's way too early to try to predict what's going to happen in specific areas," said Rudy Husband, a spokesman for Conrail in Philadelphia. The two railroads will submit their formal application to the federal Surface Transportation Board early next year, and hope to complete their deal later in the year. The railroads insisted Tuesday that their merger would be "pro-competitive." "This merger of equals represents a strategic combination that will provide excellent value for our customers and our shareholders, and is consistent with sound public policy," said John Snow, chairman of CSX. "This is the right merger at the right time between the right companies." Shippers and communities will benefit from the establishment of new single-line service, which will speed transit times, Snow said. …

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